Emerging Markets Rates and Currencies Handbook

Tax Summary – Kenya Kenya 30% earnings before interest, taxes, depreciation and amortization of the borrower in any financial year: • Not applicable to banks, financial institutions and microfinance institutions Licensed by CBK. • Transfer pricing - arm’s length principle unless the parties are related. Deductibility of (FX) Losses • Realised FX losses are tax deductible expenses • FX losses realized shall be deferred where an entity is thinly capitalized or interest payable exceeds 30% EBITDA. • This excludes banks and other financial institutions as well as micro finance institutions in Kenya • Realised FX losses are tax deductible expenses • FX losses realised on bank where interest payable exceeds 30% EBITDA are deferred into future. • Not applicable to banks and other financial institutions licensed under Banking Act • Realised FX losses are tax deductible expenses • FX losses realized shall be deferred where an entity is thinly capitalized or interest payable exceeds 30% EBIT. • This excludes banks and other financial institutions as well as micro finance institutions in Kenya • Realised FX losses are tax deductible expenses • N/A Other Taxes/Duties • N/A • N/A • N/A • N/A • N/A Management fees A 5% and 20% WHT is applicable on payment of management fees to both resident and non- resident respectively. Where a DTA exists , the rates therein supersede the rates provided for by the Third Schedule of the Income Tax Act may differ. Corporation tax rates 37.5% for branches operating in Kenya and 30% rate for companies registered as subsidiaries in the country. Transfer Pricing Three tier approach on transfer pricing has been enacted Finance Act 2022, a three tier approach for ultimate parent entities with a gross turnover over 95 billion Kenya shillings. Ultimate parent entity will be required to maintain: Country Tax Deductibility and Considerations Inter-Co Debt Offshore Derivatives Equities Bank Loans Offshore Local Borrowing